IBERIABANK Corporation, the holding company of the 121-year-old IBERIABANK and Pulaski Bank and Trust Company, decides to participate in the United States Treasury Department’s Capital Purchase Program (“CPP”).
The Company has elected to participate in the CPP up to an aggregate amount equal to $90 million, or 2.3% of its total risk weighted assets. IBERIABANK expects to close this transaction and receive these funds from the Treasury Department within the next four to ten days.
According to the approval received on 18 November 2008 up to $115 million, or 3% of total risk weighted assets will be covered under CPP program. On a pro forma basis, the company’s tier 1 risk based capital ratio would have been 11.67% and the total risk based capital ratio would have been 13.32%. On a pro forma basis also the company’s tier 1 leverage ratio would have been 8.92% including the CPP funds at 30 September 2008.
The participation of IBERIABANK in CPP program will have a dilutive effect on the company’s earnings per share (“EPS”) until the additional capital is fully deployed and levered. Assuming the bank does not leverage the additional capital received and earns a 3.00% after-tax spread on the cash received, the Company estimates the CPP funds have a dilutive impact of approximately 7% on annual after-tax EPS. The Company estimates the dilutive impact of the capital may be neutralized with an expansion of average earning assets equal to approximately $289 million, assuming a 3.00% after-tax spread on the additional assets.
L.D.